FORM 10-Q

                     SECURITIES AND EXCHANGE COMMISSION

                          Washington, DC      20549

       [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934

      or the quarterly period ended July 2, 2000

                                     OR

       [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934

           For transition period from            to
                                      ---------     --------
                       Commission file number  333-40933
                       -------------------------------
                             THE KRYSTAL COMPANY
- -----------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

                 TENNESSEE                        62-0264140
                 ---------                        ----------
    (State or other jurisdiction of      (IRS Employer identification
 incorporation or organization)             Number)

              One Union Square, Chattanooga, TN   37402
- -----------------------------------------------------------------------------
     (Address of principal executive offices, including zip code)

                         (423) 757-1550
- -----------------------------------------------------------------------------
          (Registrant's telephone number, including area code)

    Indicate by check mark whether the Registrant (1) has filed all
    reports required to be filed by Section 13 or 15(d) of the
    Securities Exchange Act of 1934 during the preceding 12 months
    (or for such shorter period that Registrant was required to file
    such reports), and (2) has been subject to such filing requirements
    for the past 90 days.

               YES  X                     NO
                   ----                       ----

This report is filed by the Company pursuant to Section 15(d) of the
Securities Exchange Act of 1934.  The Company has 100 shares of common
stock outstanding held of record by Port Royal Holdings, Inc. as of
August 11, 2000.





             THE KRYSTAL COMPANY AND SUBSIDIARY
             ----------------------------------
                        SIGNATURES
                        ----------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.




                         THE KRYSTAL COMPANY
                         (Registrant)

Dated: 08/11/00          /s/Larry D. Bentley
- ---------------          ------------------------
                         Larry D. Bentley
                        (Vice President and Chief Financial
                         and Accounting Officer)